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Subcommittee advances Guarantee Banking Act after debate over 'debanking' protections
Summary
The Banking & Insurance Subcommittee approved an amended HB 5538, known as the Guarantee Banking Act, after industry and advocacy witnesses disputed whether state law or federal action is the right remedy for alleged 'debanking.' An amendment removing two statutory sections was adopted before the bill was sent to the full committee.
The Banking & Insurance Subcommittee voted to advance HB 5538, the Guarantee Banking Act, to the full committee after adopting a targeted amendment to address industry concerns.
The bill, described by the chair as a White House-requested measure, would bar large financial institutions (those with total assets more than $100,000,000,000) from taking adverse actions against people based on religion, speech or lawful business activity and would allow the attorney general to pursue remedies for unfair or deceptive practices. The amendment adopted on the floor struck two sections (34-47-60 and 34-47-70) that members and witnesses said created ambiguity and litigation risk.
Why it matters: Supporters said the law would protect individuals, charities and small businesses from being cut off from banking services for political or religious reasons. Opponents warned it could create duplicate state and federal enforcement, add compliance costs, and invite litigation.
Industry and advocacy witnesses clashed over whether state action was necessary. David Ibsen, executive director of Americans for Free Markets, urged rejection, saying the bill would “impose extra compliance obligations, and red tape” and risk a patchwork of state requirements that could harm customers and banks. He recommended relying on ongoing federal actions and a comprehensive federal solution.
Fred Green, speaking for banking interests, called the legislation a form of “debanking” response and recommended removing lending from the bill and eliminating a private right of action, arguing that loans are individualized underwriting decisions and that including loans plus a private remedy would encourage frivolous lawsuits.
Matt Sharp, senior counsel at Alliance Defending Freedom, urged passage, saying, “Access to banking is not a luxury in modern America. It's a gateway to ordinary life,” and recounting examples where charities and businesses lost accounts, asserting the bill would provide transparency and narrowly tailored protections while allowing banks to manage fraud and risk.
The subcommittee adopted the amendment and then voted to send the amended bill to the full committee for consideration.
Next steps: HB 5538 will be considered by the full committee; the amendment adopted in subcommittee removed two contested sections to reduce perceived litigation risk.
